Weekly Markets

Perspectives

For important disclosures, refer to the Disclosure Section, located at the end of this report.

n

Oct

ob

er

22

nd,

20

12

At last week’s European Council meeting EU

leaders leaved many important issues on banking

union unanswered. Was there some unofficial

discussion of MoU conditionality regarding a

possible financial aid for Spain?

In Portugal, the 2013 Budget draft was presented

to Parliament. The government will implement

fiscal tightening measures worth 3.2% of GDP.

Moody’s concluded a 4-month plus review period

and kept Spain’s investment grade rating. S&P

downgraded 11 Spanish banks. According to latest

news, Spain seems to be more comfortable making

a request for a credit line only in order to satisfy

the conditions of the ECB to begin buying bonds.

Markets started the week on a positive note

driven by Citigroup´s earnings beat and a stronger-

than-expected US retail report. However, Last

Friday, S&P 500 dropped the most since June as

Weekly Focussome important companies, including bell-

weather General Electric, disappointed investors.

84 S&P 500 firms reported Q3 earnings during

last week. Next week will probably be critical in

assessing Q4 outlook as many Energy, Tech and

Industrial companies are expected to report.

Euro-zone trade data for August together with

August’s industrial production seems to suggest

that GDP growth in Q3 could be a positive

surprise.

China’s 3Q GDP rose 7.4% y/y. China’s growth

rate is still slowing down. However, the

September macro data could suggest some

stabilization.

The Philly Fed index was back into positive

territory for the first time since April. US housing

continues to surprise to the upside. September’s

inflation rates were in line with the Fed’s target.

-3.0%

5.0%

-1.0%

4.5%

GDP growth Budget Deficit

Portugal: Budget Forecasts2012 2013

Portugal: 2013 Budget draft was presented to Parliament• Tax increases should raise €4.3bn. Expenditure

cuts should bring savings of €1bn, including a

planned 50% cut in temporary civil-service jobs;

• The government will implement fiscal tightening

measures worth 3.2% of GDP;

• GDP is seen falling 3.0% in 2012 and 1.0% in

2013. The amount of fiscal tightening required by

the Troika is huge. Growth will likely continue to

surprise on the downside;

• Tax increases will include higher income and

corporate taxes, an increase in the capital gains

tax (from 25% to 26.5%) and higher property

taxes. A financial transaction tax could also be

introduced;

• Income tax brackets are reduced from 8 to 5. A

4% surcharge levy will be introduced on all

incomes and an additional 2.5% surcharge will

apply on the highest bracket;

• A new tax over luxury real-estate will be

implemented. Houses with a value higher than

$1mn will have to pay an additional tax; Source: 2013 Budget draft

• Pensions, unemployment rates and grants to

foundations will be reduced;

• Protests mounted in front of the parliament

against the new austerity measures;

• The budget is creating instability inside the

centre-right coalition that governs Portugal;

• Will it be more difficult for the government to

implement further tightening or to continue

with structural reforms?

Bank of Portugal releases

monthly economic indicators

Galicia and Basque Country Hold elections to the Parliament • For the market it was a key political event for

Spain. According to consensus, it could have an

influence on the timing of the Spanish request

for help;

• Meanwhile the constitucional clash in Catalonia

is ongoing. The Catalan parliament approved a

motion to hold a referendum on independence

from Spain. The Spanish government intends to

stop any consultation;

• Catalonia is not happy with the inter-regional

fiscal transfers´mechanism.

Source: Centre d´Etudis d’Opinion

• In September 2012, the monthly coincident

indicator for the year-on-year evolution of the

economic activity increased. The coincident

indicator for the evolution of private

consumption increased too;

• In the three-month period ended in August

2012, the retail turnover index fell 6.3%, in real

year-on-year terms (-6.7% in Q2 2012);

• In the 3rd quarter of 2012, sales of light

commercial vehicles dropped 55.5% y/y (-57.4%

in Q2 2012). Sales of heavy commercial vehicles

declined 10.2% (-50.2% in Q2 2012). Cement

sales of national firms to the domestic market

fell 31.5% y/y (-29.7% in Q2 2012);

• In August, the annual growth rate of loans

granted to the resident non-monetary sector

(excluding General Government) by resident

banks was -4.2%, 0.2pp lower than the rate

observed in the previous month.

10.51%

3.08%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

0%

2%

4%

6%

8%

10%

12%

2008 2009 2010 2011 2012

Spain: Non-performing loans

NPLs to Total Loans NPLs % monthly change (right scale)

Moody’s keeps Spain’s rating

at Investment Grade• Tuesday evening, the Moody’s ratings agency

announced that it kept the Spanish sovereign

rating at Baa3. The rating was kept on negative

outlook;

• The negative outlook reflects that the "risks to its

baseline scenario are high and skewed to the

downside“;

• The ratings agency sees significant risks to the

economic outlook in Spain;

• Moody’s expect the country to ask for an

enhanced conditions credit line from the ESM as

a prerequisite for the ECB to activate its OMT

program, rather than a full-blown bailout

program;

• The consensus is that Spain would ask for aid

after the regional elections on October 21st. The

Eurogroup meeting on November 12th could be

an important date to watch.

• Non-Performing Loans increased 3.1% m/m

(+39.7% y/y) to €178.6bn in August and reached

the highest level since Bank of Spain started to

collect data in 1962;

• Spanish banks’ government bond holdings fell to

€243.8bn in August, still 6.7% of total assets;

• The economy is still deleveraging. Loan volumes

decreased to €1,699bn. They are at August 2007

levels.

Source: Bank of Spain

Spain: NPL ratio reached

10.51% in August

9.9

-15

-10

-5

0

5

10

2000 2002 2004 2006 2008 2010 2012

Eurozone External EU Trade Balance(€bn)

399.5

0

100

200

300

400

500

2006 2008 2010 2012

GB

P B

ln

Bank of England

Balance Sheet

• Export values increased by 3.7% in August.

Imports rose by 2.1%. Seasonally adjusted

trade surplus reached €9.9bn;

• Net trade should have made a positive

contribution to euro area GDP in Q3;

• Together with August’s industrial production,

euro-zone trade data seems to suggest that

GDP growth in Q3 could be a positive surprise.

Euro-zone trade data for

August was healthy

Source: Eurostat

BOE: October minutes were

released• It was decided to not expand the asset buying

program. This decision wasn’t unanimous.

Some members felt that there was still

considerable scope for assets purchases to

provide further stimulus on the economy;

• “… safe-heaven flows into the United Kingdom

had lessened”;

• Headline CPI inflation fell from 2.6% y/y to 2.5%

y/y in September. This is the lowest level since

November 2009.

Source: Bank of England

6.2%

11.9%

7.4%

6%

7%

8%

9%

10%

11%

12%

13%

2005 2007 2009 2011 2013

China GDP constant price(Y/Y change)

China’s 3Q increases 7.4%• China’s 3Q GDP rose 7.4% y/y, in line with

consensus, following 7.6% growth in 2Q;

• Industrial production increased 9.2% y/y in

September, compared to 8.9% in August.

Electricity production was up 1.5% y/y in

September;

• Retail sales value increased 14.2% y/y in

September, compared to 13.2% in August;

• China’s growth rate is still slowing down.

However, the September macro data could

suggest some stabilization.

Not much progress from

last week’s European

Council meeting

Source: Bloomberg

• Banking union and fiscal coordination were on

the European Council’s agenda;

• On banking union, the objective to agree on the

legislative framework for the Single Supervisory

Mechanism by January 1st, 2013 was maintained.

But, no agreement on the actual implementation

was found;

• With governments’ borrowing costs down,

European leaders don’t seem to have any sense

of urgency;

• Moreover, with German federal elections in

September 2013, probably there’s little chance

of any material progress on these issues in the

near future;

• We’ll have to wait until the Ecofin (12th/13th) and

the European Council meeting (22nd/23rd) of

November to get more clarity on Greece, Cyprus

and Spain.

2.0%

-3%

-2%

-1%

0%

1%

2%

3%

4%

5%

6%

2006 2008 2010 2012

Consumer Price Inflation (annual rate)

CPI

Core CPI

US Retail sales rises 1.1% in

September• Even excluding gasoline (+2.5%), autos (+1.3%)

and building materials (+1.1%), sales rose by an

impressive 0.9% m/m;

• However, the number has probably been boosted

by two temporary effects: the increase in food

prices due to the recent drought and the release

of iPhone 5;

• Industrial Production increased 0.2% m/m, a

small reversion of the 0.7% m/m fall in August.

The manufacturing sector is still struggling, as the

economic slowdown hits exporters.

• The 0.6% m/m increase in September’s

consumer price was due to rise in gasoline

prices. The annual rate of CPI inflation edged

up to 2.0%, from 1.7% in August;

• Excluding food and energy, core prices

increased by 0.1% m/m. The annual rate of

core inflation rose to 2.0%, from 1.9%;

• So, both inflation rates are in line with the

Fed’s target.

Jun Jul Aug Sep

Retail sales (m/m) -0.7% 0.7% 1.2% 1.1%

(y/y) 3.5% 4.0% 5.0% 0.0%

Sales (Ex. Autos, Gas & Buil.) (m/m) -0.2% 0.9% 0.1% 0.9%

Source: US Commerce Department

US Retail Sales

US CPI in line with the Fed’s

target

Source: Bureau of Labor Statistics

2.9%

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

2008 2009 2010 2011 2012

US: Leading Indicators(y/y change)

5.7

-6.16

-20

-15

-10

-5

0

5

10

15

20

25

Jan Feb Mar Apr May Jun Jul Aug Sep Oct

US Regional Surveys

Empire State Index

Philly Fed Index

US: Regional surveys

improve

• The Philly Fed index was back into positive

territory for the first time since April. The Empire

State Index also showed some signs of recovery;

• Both surveys seems to indicate that the national

ISM could increase in October;

• Conditions for the US industry seems to be

improving a bit.

Leading Indicators rose

0.6% m/m in September

• Leading indicators increased 0.6% m/m in

September, after falling -0.4% m/m in the

previous month. The economy is still fluctuating

around a slow growth trend;

• The building permits and financial components

offset negative contributions from ISM new

orders and consumer expectations. 6 of the 10

components of the indicator increased last

month.

Source: Bloomberg Source: The Conference Board

Source: Bloomberg

• So far, 116 companies have reported Q3 results;

• The average EPS surprise has been 4%;

• Excluding Financials, there are fewer positive

surprises and more negative surprises;

S&P 500 Earnings Update: Q3 2012 as of October 19th, 2012• The consensus estimate of the Information

Technology sector’s Q3 2012 EPS fell after

Microsoft and Google missed earnings and

revenue estimates;

• Financials sector’s EPS has been rising since the

start of the Q3 season.S&P 500 Q3 Earnings Summary as of October 19th, 2012

Average Q3 Average Q3

Reported Total % of Co's Positive Negative In-line Surprise Positive Negative In-line Surprise

Oil & Gas 6 41 14.6% 50.0% 50.0% 0.0% -4.2% 16.7% 83.3% 0.0% -0.5%

Basic Materials 5 26 19.2% 60.0% 40.0% 0.0% -0.8% 40.0% 60.0% 0.0% 0.4%

Industrials 19 75 25.3% 63.2% 36.8% 0.0% 0.3% 36.8% 63.2% 0.0% -0.9%

Consumer Goods 14 57 24.6% 71.4% 28.6% 0.0% 2.6% 35.7% 64.3% 0.0% -0.9%

Health Care 11 46 23.9% 81.8% 18.2% 0.0% 2.6% 18.2% 81.8% 0.0% -1.1%

Consumer Services 18 74 24.3% 77.8% 16.7% 5.6% 2.6% 38.9% 61.1% 0.0% 0.1%

Telecommunications 1 8 12.5% 0.0% 0.0% 100.0% 0.0% 0.0% 100.0% 0.0% 0.0%

Utilities 0 32 0.0% n.m. n.m. n.m. n.m. n.m. n.m. n.m. n.m.

Financials 29 85 34.1% 82.8% 13.8% 3.5% 12.9% 69.0% 31.0% 0.0% 3.3%

Technology 13 54 24.1% 38.5% 61.5% 0.0% -2.8% 38.5% 61.5% 0.0% -1.9%

S&P 500 116 498 23.3% 69.0% 28.5% 2.6% 4.0% 42.2% 57.8% 0.0% 0.2%

S&P 500 ex. Financials 87 417 20.9% 64.4% 33.3% 2.3% 0.0% 33.3% 66.7% 0.0% 0.8%

Comparative Data (full earnings season)

Q2 2012 69.4% 29.8% 0.8% 3.8% 41.8% 58.0% 0.2% 0.1%

Number of companies Earnings Suprises Revenues Surprises

2.104

1.0

2.0

3.0

4.0

Jan-12 Mar-12 Mai-12 Jul-12 Set-12

Nokia share price (€)

• Shares of Google lost 8% last Thursday, after

disappointing number that came hours ahead of

schedule. Google issued a statement blaming R.R.

Donnelley & Sons, its filing agent. Core Google q/q

revenue growth was 4.7%. Core Google q/q advertising

revenue reached 2.1%. Google web sites revenues were

driven by weakness in international and FX;

• Nokia’s cash performance was weak in Q3. Net cash

decreased by €633m. Excluding the quarterly cash

payment from Microsoft, it fell by €835m. Devices

remain fragile but NSN is showing a better performance;

• Citigroup unexpectedly announced that Vikram Pandit

was stepping down as CEO. Mike Corbat, most recently

CEO of Citi’s EMEA business, has been elected as the new

CEO;

• Last Friday, S&P 500 fell -1.7%, the most since June, as

General Electric (-3.4%), McDonald’s (-4.5%) and

Microsoft (-2.9%) disappointed investors. Advanced

Micro Devices sank 17%, its biggest drop in 4 years. The

company said Q4 sales will miss analysts’ estimates. AMD

will reduce 15% of its staff.

Last week’s market highlights

Source: Bloomberg

What we are watching this week:• HSBC Manufacturing PMI for China

will be released Wednesday.

September’s PMI was 47.9. A higher

value should probably be well

received;

• Many survey indicators will be

released this week in Europe.

Following the trade data and

industrial production positive

surprises for August, some recovery

is expected for those indicators;

• In the US, regional surveys and

housing indicators should be

released during the week;

• A two-day FOMC meeting concludes

on Wednesday. No further policy

stimulus announcement is expected;

• The Q3 earnings season will begin

this week in Portugal with Portucel

(today), BPI (Wednesday, after-mkt)

and Jeronimo Martins (Friday).

CALENDAR - Event Date Hour (BST) Survey Prior

Bank of Japan minutes (of Oct 5 monetary policy meeting) 10-22-2012 Not Available Not Available Not Available

Euro-Zone Consumer Confidence 10-23-2012 15:00 -25.9 -25.9

France INSEE manufacturing survey (Oct) 10-23-2012 07:45 90 90

Ireland European Court of Justice (to hear Irish ESM case) 10-23-2012 Not Available Not Available Not Available

Canada monetary policy decision 10-23-2012 Not Available Not Available Not Available

BoE's Governor King speech 10-23-2012 Not Available Not Available Not Available

Richmond FED Manufacturing, US 10-23-2012 15:00 4.0 4.0

HSBC flash Manufacturing PMI, China (Oct) 10-24-2012 02:45 Not Available 47.9

Germany issues 10Y, GB 10-24-2012 Not Available Not Available Not Available

PMI Manufacturing, France 10-24-2012 08:00 44.0 42.7

PMI Services, France 10-24-2012 08:00 45.4 45.0

PMI Manufacturing, Germany 10-24-2012 08:30 48.0 47.4

PMI Services, Germany 10-24-2012 08:30 50.0 49.7

IFO - Business Climate, Germany (Oct) 10-24-2012 09:00 101.6 101.4

PMI flash Manufacturing, Euro-Zone (Oct) 10-24-2012 09:00 46.5 46.1

PMI flash Services, Euro-Zone (Oct) 10-24-2012 09:00 46.4 46.1

ECB's Draghi meeting with German lawmakers in Bundestag 10-24-2012 Not Available Not Available Not Available

MBA Mortgage Applications, US 10-24-2012 12:00 Not Available -4.20%

Markit US PMI Preliminary 10-24-2012 Not Available 51.5 Not Available

New Home Sales, US 10-24-2012 15:00 385K 373K

US FOMC monetary policy decision (statement at 7.15pm BST) 10-24-2012 19:15 0.25% 0.25%

Euro-Zone M3 s.a. YoY (Sep) 10-25-2012 09:00 3.0% 2.9%

Sweden Riskbank monetary policy meeting 10-25-2013 Not Available Not Available Not Available

Preliminary GDP YoY, United Kingdom (3Q12) 10-25-2012 09:30 -0.5% -0.5%

Durable Goods Orders US 10-25-2012 13:30 6.80% -13.20%

Inital Jobless Claims, US 10-25-2012 13:30 371K 388K

Pending Home Sales MoM US 10-25-2012 15:00 2% -2.60%

Kansas City FED Manufacturing, US 10-25-2012 16:00 5 2

GfK Consumer Confidence Survey, Germany 10-26-2012 07:00 5.9 5.9

Nationwide CPI, Japan (Sep) 10-26-2012 Not Available Not Available Not Available

Korea prelim. real GDP (3Q12) 10-26-2012 Not Available Not Available Not Available

Mexico monetary policy decision 10-26-2012 Not Available Not Available Not Available

Consumer Confidence Indicator, France 10-26-2012 07:45 84 85

Unemployment Rate (Survey), Spain 10-26-2012 08:00 24.90% 24.63%

Business Confidence, Italy 10-26-2012 09:00 88.7 88.3

Real GDP QoQ (Annualized), US (3Q12) 10-26-2012 13:30 1.80% 1.30%

U. of Michigan Confidence, US (Oct) 10-26-2012 14:55 83 83.10%

101.4

80

90

100

110

120

2009 2010 2011 2012 2013

Germany Ifo business climate index

373

0

500

1,000

1,500

2000 2002 2004 2006 2008 2010 2012

US New Home Sales (000s, annualized)

Next Week Preview: Economics • The first estimate of US Q3 GDP should be

released next Friday (13:30 GMT). Consumption

growth appears to have accelerated. Residential

investment is expected to show a robust

increase. However, business investment and net

trade should be a drag on GDP growth;

• Low mortgage rates and higher confidence

amongst homebuyers could justify stronger

housing demand. Orders at the major

homebuilders seem to point to futher increases

in new sales. The recovery in the housing market

is gathering pace;

• Survey indicators represent the most important

data releases this week in Europe. We’ll have

French and German PMI manufacturing and

services for October. The September PMIs

pointed to divergence between those two

countries. Will it continue with October releases?

German IFO business climate will also be

released (Wednesday, 9:00 BST).

Source: Bloomberg

2.3% 2.2%2.6% 2.4%

0.1%

2.5%

1.3%

4.1%

2.0%

1.3%

Q1

2010

Q2

2010

Q3

2010

Q4

2010

Q1

2011

Q2

2011

Q3

2011

Q4

2011

Q1

2012

Q2

2012

Q3

2012

Q4

2012

US GDP (q/q annualized)

39.8

3

8

13

18

23

28

33

38

43

1948 1958 1968 1978 1988 1998 2008

US Unemployment Duration average(number of weeks)

3.37%

3.2%

3.4%

3.6%

3.8%

4.0%

4.2%

Jan-12 Mar-12 Mai-12 Jul-12 Set-12

US Mortgage Interest rates

30 yr Fixed rate

Next Week Preview: FOMC meeting• Next week’s two-day FOMC meeting concludes

on Wednesday 24th October;

• No post-meeting press conference is scheduled

for Chairman Ben Bernanke;

• Mortgages rates have been falling in the

aftermath of the Q3 announcement;

• The adoption of numerical threholds for the

unemployment rate and inflation could again be

discussed. At the last FOMC meeting, The Fed

came close to a decision, but Fed’s officials

couldn´t reach agreement on a compromise. Will

that change be discussed again?

• Probably, the Fed will wait until the conclusion of

its Operation Twist at the end of the year. Then,

at its mid-December meeting the Fed could

decide about the possibility of expanding QE3;

• Despite the reported decline in the

unemployment rate to a four-year low in

September (7.8%), the US labor market is still

weak. The broader employment-to-population

ratio has barely moved since 2009.

Source: Freddie Mac Commitment Rates

Source: Bureau of Labor Statistics

Next Week Preview: Portugal – Q3 earnings seasonPortucel (PTI PL) – 3rd Quarter Results: A resilient

quarter? (To be released 22nd October)

• Sales should rise 6% y/y to €379m, down -2.8%

q/q. Revenues from the paper division should be

resilient. Given the weak macro-environment, the

company have been trying to gain market share

in Europe, following capacity closures. EBITDA

should reach €94m, down -3% q/q, but up 3.4%

y/y. EBITDA margins should fall to 24.9%. Higher

exports to Eastern Europe should penalize gross

margins. Net income is expected at €47m,

roughly at the same level of Q3 2011, but down -

13% q/q.

BPI (BPI PL) – Q3 Earnings Preview(To be released 24th October, after market’s close, 17:00 BST)

• Q3 NII is expected at €148m (€440m for the 9M).

NII should reflect the cost of CoCo’s. Total

revenues should reach €314m (€947m for the

9M), driven by solid trading gains. Pre-provision

profit is expected at €158m (€475m for the 9M)

and net profit at €36m (€121m for the 9M). Loans

provisions should remain high, given macro

challenges in Portugal.

Jerónimo Martins (JMT PL) – 3rd Quarter Results:

Underpinned by Poland (To be released 26th October)

• Sales should rise 12% y/y to €2.881m

underpinned by Poland. The activity in Portugal

should reflect the depressed economic activity.

EBITDA margin should decrease this quarter

over the year ago. High LFLs are expected in

Poland. The total number of stores in the

country should have increased during Q3.

EBITDA and Net Income are expected to have

increased. Next Thursday, we´ll put out a

earnings preview report with further details.

Next Week Preview: Q3 European results • A really big number of European companies should report this week.

Monday, October 22nd

Svenska Handelsbanken AB Q3 2012 Results

Koninklijke Philips Electronics NV Q3 2012 Results

Electrolux AB Q3 2012 Results

Scania AB Q3 2012 Results

Tuesday, October 23rd

Enagas SA Q3 2012 Results

Koninklijke KPN NV Q3 2012 Results

Norsk Hydro ASA Q3 2012 Results

Swedbank AB Q3 2012 Results

Alfa Laval AB Q3 2012 Results

ARM Holdings PLC Q3 2012 Results

Stora Enso OYJ Q3 2012 Results

STMicroelectronics NV Q3 2012 Results

Wednesday, October 24th

SAP AG Q3 2012 Results

Nordea Bank AB Q3 2012 Results

Telenor ASA Q3 2012 Results

Wacker Chemie AG Q3 2012 Results

Volvo AB Q3 2012 Results

Storebrand ASA Q3 2012 Results

Verbund AG Q3 2012 Results

Konecranes OYJ Q3 2012 Results

Outokumpu OYJ Q3 2012 Results

Reckitt Benckiser Group PLC Q3 2012 Results

Iberdrola SA Q3 2012 Results

Atlas Copco AB Q3 2012 Results

Mediaset Espana Comunicacion SA Q3 2012 Results

Volkswagen AG Q3 2012 Results

Saipem SpA Q3 2012 Results

Home Retail Group PLC S1 2013 Results

Thursday, October 25th

ABB Ltd Q3 2012 Results

Credit Suisse Group AG Q3 2012 Results

Novartis AG Q3 2012 Results

BASF SE Q3 2012 Results

Technip SA Q3 2012 Results

Skandinaviska Enskilda Banken AB Q3 2012 Results

Jeronimo Martins SGPS SA Q3 2012 Results

Solvay SA Q3 2012 Results

Daimler AG Q3 2012 Results

Sanofi Q3 2012 Results

Sandvik AB Q3 2012 Results

Petroleum Geo-Services ASA Q3 2012 Results

Banco Santander SA Q3 2012 Results

Banco de Sabadell SA Q3 2012 Results

UPM-Kymmene OYJ Q3 2012 Results

Debenhams PLC Y 2012 Results

Metso OYJ Q3 2012 Results

Luxottica Group SpA Q3 2012 Results

Acerinox SA Q3 2012 Results

Dassault Systemes SA Q3 2012 Results

AstraZeneca PLC Q3 2012 Results

Altisource Portfolio Solutions SA Q3 2012 Results

Friday, October 26th

Banco Popular Espanol SA Q3 2012 Results

Red Electrica Corp SA Q3 2012 Results

Snam SpA Q3 2012 Results

Marine Harvest ASA Q3 2012 Results

Belgacom SA Q3 2012 Results

Statoil ASA Q3 2012 Results

Telefonaktiebolaget LM Ericsson Q3 2012 Results

Husqvarna AB Q3 2012 Results

Mapfre SA Q3 2012 Results

Mediq NV Q3 2012 Results

CaixaBank Q3 2012 Results

Abertis Infraestructuras SA Q3 2012 Results

Next Week Preview: US earnings season

Monday, October 22nd

Caterpillar Inc Q3 2012 Results

Freeport-McMoRan Copper & Gold Inc Q3 2012 Results

Texas Instruments Inc Q3 2012 Results

Yahoo! Inc Q3 2012 Results

Wynn Resorts Ltd Q3 2012 Results

Tuesday, October 23rd

Virgin Media Inc Q3 2012 Results

United Technologies Corp Q3 2012 Results

Harley-Davidson Inc Q3 2012 Results

Lexmark International Inc Q3 2012 Results

Reynolds American Inc Q3 2012 Results

CIT Group Inc Q3 2012 Results

AK Steel Holding Corp Q3 2012 Results

EI du Pont de Nemours & Co Q3 2012 Results

Whirlpool Corp Q3 2012 Results

Xerox Corp Q3 2012 Results

United Parcel Service Inc Q3 2012 Results

Illinois Tool Works Inc Q3 2012 Results

Netflix Inc Q3 2012 Results

Gilead Sciences Inc Q3 2012 Results

Altera Corp Q3 2012 Results

Broadcom Corp Q3 2012 Results

Questcor Pharmaceuticals Inc Q3 2012 Results

Compuware Corp Q2 2013 Results

Aflac Inc Q3 2012 Results

Juniper Networks Inc Q3 2012 Results

Fortune Brands Home & Security Inc Q3 2012 Results

Facebook Inc Q3 2012 Results

Amgen Inc Q3 2012 Results

3M Co Q3 2012 Results

• This could be an important week. We’ll have many Tech and Industrial companies reporting. Apple

should announce its quarterly results Thursday.Wednesday, October 24

th

Kimberly-Clark Corp Q3 2012 Results

Eli Lilly & Co Q3 2012 Results

Lockheed Martin Corp Q3 2012 Results

Praxair Inc Q3 2012 Results

General Dynamics Corp Q3 2012 Results

Corning Inc Q3 2012 Results

Boeing Co/The Q3 2012 Results

AT&T Inc Q3 2012 Results

Symantec Corp Q2 2013 Results

Zynga Inc Q3 2012 Results

Bristol-Myers Squibb Co Q3 2012 Results

Level 3 Communications Inc Q3 2012 Results

Allegheny Technologies Inc Q3 2012 Results

Delta Air Lines Inc Q3 2012 Results

US Airways Group Inc Q3 2012 Results

Thursday, October 25th

New York Times Co/The Q3 2012 Results

International Paper Co Q3 2012 Results

Dow Chemical Co/The Q3 2012 Results

PulteGroup Inc Q3 2012 Results

Bunge Ltd Q3 2012 Results

Colgate-Palmolive Co Q3 2012 Results

Biogen Idec Inc Q3 2012 Results

Procter & Gamble Co/The Q1 2013 Results

Sprint Nextel Corp Q3 2012 Results

Raytheon Co Q3 2012 Results

ConocoPhillips Q3 2012 Results

KLA-Tencor Corp Q1 2013 Results

Eastman Chemical Co Q3 2012 Results

Apple Inc Q4 2012 Results

Amazon.com Inc Q3 2012 Results

Friday, October 26th

Legg Mason Inc Q2 2013 Results

Goodyear Tire & Rubber Co/The Q3 2012 Results

First Solar Inc Q3 2012 Results

2.1%

1%

3%

5%

7%

Mar-11 Set-11 Mar-12 Set-12

yie

ld-t

o-m

atu

rity

Italian 2yr Government bond yield

Charts we are watching (I)

• The spread between Portuguese and German

10-year Government bond yiels reached its

lowest value since May 2011. Portugal has

recently announced new austerity measures to

make up for the budget shortfall. Nevertheless,

the overall economic and public finance

outlook remains very fragile. Does the market

believe that with the OMT the road to market

access will be easier?

• The ECB’s recently announced OMT program

seems to have been decisive for the italian

Government bond market. A stagnant

economy has been a feature of Italy. This could

affect the long-term sustainability of its debt

trajectory. If Spain ask for aid, will market

pressure intensify again and push Italy towards

asking for sovereign support?

Source: Bloomberg

Source: Bloomberg

8

10

12

14

2008 2010 2012

ZA

R p

er

EU

R u

nit

ZAR - EUR Exchange rate

11.27

70.37

50

55

60

65

70

75

2006 2007 2008 2009 2010 2011 2012

INR

pe

r E

UR

un

it

EUR-INR exchange rate

Charts we are watching (II)

• India’s September headline inflation (7.8% y/y)

came higher than consensus expectations.

Underlying pressures persist. This could reduce

the likelihood of a rate cut on October 30th.

India has recently been characterized by

persistent inflation, a rising fiscal and current

account deficit, high currency volatility and

weakening output growth…

• Standard & Poor’s revised this month South

Africa’s sovereign rating for both foreign

currency (to BBB) and local currency (to A-) by

one notch. The statement accompanying the

downgrade noted the current risks to growth

and to the current account deficit from

domestic labor disruptions, the political

environment and from a weak external

environment. The local currency is weakening

again...

Source: Bloomberg

Source: Bloomberg

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